LONDON: Sterling eased to its lowest level against the dollar in 2-1/2 weeks on Tuesday, as the strengthening US currency put a brake on gains that had taken the pound to 2-1/2-year highs last week.

The pound has so far been the best performing G10 currency in 2021, up 1.65% against the dollar, although its lead over other currencies is diminishing.

Bets that Britain’s rapid vaccine rollout would underpin an economic rebound boosted sterling as far as 4.2% above its year-end price to the dollar as recently as last week.

However, expectations of a faster US economic recovery and for the Federal Reserve to show greater tolerance to higher bond yields than other central banks have boosted the greenback in recent days.

By 1500 GMT, sterling was flat at $1.3931, earlier hitting a 2-1/2 week low of $1.3867. It was flat to the euro at 86.42 pence. “Sterling lost further ground overnight ahead of tomorrow’s budget announcement on the back of the spike in risk aversion during the Asian session in a context of generalized USD strength,” said Roberto Cobo Garcia, FX strategist at BBVA.